1 THE BROOKINGS INSTITUTION THE 2004 CAMPAIGN: ASSESSING THE MERITS AND COSTS OF THE CANDIDATES' DOMESTIC AGENDAS INTRODUCTION AND PANEL ONE: THE CAMPAIGN AGENDAS Wednesday, June 23, 2004 [TRANSCRIPT PRODUCED FROM A TAPE RECORDING] MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 2 INTRODUCTION: Strobe Talbott President, Brookings Institution PANEL ONE: THE CAMPAIGN AGENDAS Moderator: Albert R. Hunt Executive Washington Editor, Wall Street Journal Tom Loveless Director, Brown Center on Education Policy, The Brookings Institution Isabel V. Sawhill Vice President and Director, Economic Studies, The Brookings Institution Kenneth Thorpe Professor and Chair, Health Policy and Management, Emory University Jack Meyer President, Economic and Social Research Institute Leonard Burman Senior Fellow, Urban Institute Co-Director, Tax Policy Center Bruce Bartlett Senior Fellow, National Center for Policy Analysis Question and Answer Session MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 3 THIS IS AN UNCORRECTED TRANSCRIPT. P R O C E E D I N G S MR. TALBOTT: Good morning, everybody. I'm Strobe Talbott and I want to just say a quick word of welcome to all of you coming out to participate in this forum on the major domestic issues figuring in the presidential campaign this year. At this stage in the process, it's natural enough that most of the journalists and the political analysts are concentrating on the horse race, which is to say on the candidates' standing in the polls and their personal styles, their campaign strategies, the main themes in their stump speeches, and that kind of thing. Today's discussion is going to focus very much on the substantive issues facing the nation, the issues that are going to matter the most over the long term to the citizens of this country. Those of us here in the room today who are associated with Brookings like to think of this event as a classic Brookings activity very much in the spirit of the motto of the institution, which is up here on the wall above the panelists. It's our mission to try to help develop sound public policies through independent, nonpartisan analysis and research, to promote better public understanding of the most important issues on the national agenda, and to set an example, in the way we go about our business, of a high level of civil, political, and public discourse, particularly in a season when that commodity is in fairly short supply. We're going to be concentrating today on the following issues: education, health care, taxes, and the budget. We've assembled an excellent group of experts to assess the two major candidates' positions. We're also very pleased that there would be MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 4 with us today representatives of both the Bush and Kerry campaigns to offer their perspectives and to respond to observations and questions from all of you. This event today is going to be followed by others in the months to come. In the fall, my colleague Tom Mann and his team from our Governance Studies Program will be examining the political process, which is to say questions such as the role of swing voters, the shaping of political perceptions, and the evolution of party organizations. We will, of course, also during the course of the remainder of this year, delve deeper into the issues themselves as the candidates refine their positions. Now I'm going to turn the proceedings over to a very good friend and colleague, Al Hunt, who is going to be moderating today's event. MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 5 PANEL I: THE CAMPAIGN AGENDAS MR. HUNT: Strobe, thank you so much. It's always a delight to be at this prestigious place. I must tell you a story quickly. I gave the speech about 20 years ago to the Brookings annual meeting of trustees, and I pointed out that when I first arrived in Washington I was assigned to cover the Treasury. And I had come down on the plane the night before with Paul Samuelson's basic text in my lap--I knew so little about economics. It was tougher back then, Bruce. You had to read demand as well as supply. But I had to cover my first Treasury refunding three days later. And I went to it, and I called the Dow Jones Ticker, the newspaper, and the interest rate was something like 4.37852. And I got 4.37825. I got five out of six; I thought that was pretty good. The next morning, I was called by the then-assistant secretary of the treasury to his office, a man named Paul Volcker, who asked me if I had any idea how much money I had lost people by that careless mistake. And I said no. And then he looked at me and said, Do you know what a refunding is? And I said, Well, I'm working on that. And he said, You've got a long way to go, and I'm going to try to teach you but it's not going to be easy. So I told that story that night. And I said, So I was incredibly lucky to have a teacher like Paul Volcker to learn economics. And afterwards, Paul came up and said, Al, that story you told about how I taught you economics? I said, Yes, sir. He said, I've read your stuff. Please don't tell it again. [Laughter.] MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 6 MR. HUNT: So Strobe, I won't embarrass you today. What this is all about this morning is an enduring reality and strength of American politics, but one frequently short-changed, I'm afraid, by the 24/7 media of today, namely, that ideas matter and they have consequences. We chop down a lot of trees and experience considerable hyperventilation talking about what effect "Fahrenheit 9/11" or "The Passion of the Christ" will have on the election, or Ronald Reagan's death or Bill Clinton's memoirs. And the answer is they will have virtually none. But what we're going to talk about this morning will have an impact. The war in Iraq, the sense of whether that family in southern Ohio thinks their economic well-being is improving or is eroding, and the broad cultural issues, and the sense that voters get of these two men running for president. And I would argue that part of the sense they get is what ideas are advanced and how they advance those ideas, the sense of what a Kerry or a sense of what a second Bush presidency would be all about. I think it would be very hard for anyone to argue that those ideas enunciated in 1980 didn't matter when Ronald Reagan was elected, or Bill Clinton's ideas in 1992, or, for that matter, George W. Bush's in 2000. We're lucky we have a superb bipartisan collection of experts. Each needs no introduction, so therefore I'm only give them about a 10-second introduction. If anybody wants to know anything more, I think you have it in your packets. Everyone has agreed to a seven-minute time limit. We have the enforcer sitting there in the front row. And then afterwards, we'll have time for some questions and answers and participation from you all. MILLER REPORTING CO., INC. 735 8th STREET, S.E. WASHINGTON, D.C. 20003-2802 (202) 546-6666 7 Very briefly, our panelists today are Tom Loveless, a senior fellow and director of the Brown Center on Education Policy at Brookings; Ken Thorpe, who is the Robert W. Woodruff professor and chair of the Department of Health Policy at Emory. Ken, I have to tell you I'm envious because I married someone named Woodruff, and it was only after we were married I found out that she was not one of the Atlanta Woodruffs. So I'm really envious of someone who has a link to those Atlanta Woodruffs. Jack Meyer, who's president of the Economic and Social Research Institute, which studies ways to improve the cost-effectiveness of social programs; Len Burman, the co-director of the Tax Policy Center and senior fellow at the Urban Institute--I think also a visiting professor at Georgetown; Bruce Bartlett, an architect of supply side economics, former aide to Jack Kemp and Ronald Reagan and now, of all things, a newspaper columnist; and finally, the legendary Belle Sawhill, who is a senior fellow and vice president for economic studies at Brookings and, with Ron Haskins, the creator of this important forum. So, Tom, I think we start with you, if I remember my schedule right. MR. LOVELESS: Thank you, Al. I'm not an economist, so I'm not going to give you an economic analysis of the two campaign proposals that are before us. I study schools and I study education policy. So what I am going to do is the following three things: First of all, I'm going to talk about the proposals that are currently on the table from both the Bush and Kerry campaigns. I'm going to comment on the educational research that exists on these proposals; in other words, would they actually have dramatic effects in terms of MILLER REPORTING CO., INC.